Diversification is the proverbial don’t put all your eggs in one basket. So while diversification is about the eggs, asset allocation is about the basket.
Is the U.S. stock market overpriced today? According to two measures of value, Q Ratio and CAPE the answer is yes—and dangerously so.
Over the last ten years, however, $1 trillion of investors’ money has moved from active to indexes. A big reason for this is that, over that same period, most active managers have underperformed lower cost-index options.
You just retired. Along with a great career, you have built up a substantial 401(k) balance. However, now you need income, not growth.
So why should anyone own gold when its connection to money is founded in part on folklore and a gold standard that no longer exists? Well, first of all, economics and finance are not physics—a lot of it is ruled by mythology, rules of thumb, and superstitions.
Because different countries have different currencies, overseas travel is usually more complicated than domestic travel. Likewise, overseas investing is more complicated than domestic investing.